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To: G. H. who wrote (2220)	4/30/1999 12:03:00 PM
From: Steve Fancy	Respond to of 3813

Chip equipment stocks fall after analyst comments Reuters, Thursday, April 29, 1999 at 20:40 SAN FRANCISCO, April 29 (Reuters) - Shares of semiconductor equipment makers, which develop the hefty systems used to make computer chips, fell broadly on Thursday after a Wall Street analyst sounded a cautious note about their high price levels. SoundView Financial Group analyst Mike O'Brien said he took Teradyne Inc. (NYSE:TER) off the firm's recommended list, and said he was wary about the other stocks in the group. Shares of Teradyne fell $4.375 to $49.31 on the New York Stock Exchange on Thursday. Applied Materials Inc. (NASDAQ:AMAT) was the second most actively traded stock on NASDAQ, falling $2.31 to $51.875 and Novellus Systems Inc. (NASDAQ:NVLS), another chip equipment maker dropped $2.06 to $49.44 on Nasdaq. KLA-Tencor Inc. (NASDAQ:KLAC) slipped $1.19 to $50.81, and Lam Research Inc. (NASDAQ:LRCX) eased $1.375 to $31.375, both on Nasdaq. O'Brien said that memory chip prices are declining again, and the lower prices may make it harder for the big memory chip makers to buy new equipment. "People are getting worried, as we get into the third and fourth quarter and 2000, about whether the buys for additional equipment will happen," he said. "So we are just saying that if that is coming into question, the valuations are probably going to get compressed." O'Brien said the stocks are currently trading at about 25-30 times 2000 earnings estimates, higher than their typical average price/earnings ratio of 20 times forward earnings. He continues to rate Teradyne a strong buy and Applied Materials, the world's largest maker of chip equipment, a strong buy. "It is still likely that the spending cycle could continue, but a fear of a hiccup puts into question whether people are willing to pay 25 to 30 times forward earnings," O'Brien said. Copyright 1999, Reuters News Service

To: G. H. who wrote (2220)	4/30/1999 12:05:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 3813

U.S. OPTIONS- Applied Materials (NASDAQ:AMAT) calls bid Reuters, Thursday, April 29, 1999 at 19:06 CHICAGO, April 29 (Reuters) - Implied volatilities for Applied Materials Inc. options spiked up on Thursday due mainly to strong bid for out-of-the-money calls, despite a sharp drop in the underlying stock this week. "We've got a lot of call buyers today, May calls particularly," said Ross Goodheart of Group One Trading L.P., lead market-maker of the options on the Pacific Exchange. The stock was down 4-1/16 at 50-1/8 at midsession on volume of more than 17 million shares after dipping to 48-7/16 earlier. It has fallen more than 10 points from last week's 60-3/4 close and nearly 20 from a 68-7/8 high on April 7. However, the out-of-the-money May 60 and 55 calls were among the busiest contracts on the Pacific Exchange with about 2,600 and 1,900 contracts trading. Given the big slide in the stock, a surge in the options' implied volatilities was no big surprise, but some market watchers suggested that the low-delta call activity meant there could be a lot of speculative plays taking place, probably in anticipation of a quick rebound in the stock. Implied volatility for May at-the-money 50 calls shot up above 80 percent from about 70 on Wednesday and around 60 in the last month or so, noted Paul Foster, strategist at 1010wallstreet.com. "This means that we're waiting for something," he said. "Volatility spiking this high, something's going on." Traders said there appeared to be no major news on the company in the last few days and that quarterly earnings were not due out until around May 18. A Merrill Lynch report to its clients cited the semiconductor equipment industry's exposure to the dynamic random access memory business as a possible reason for the stock's weakness but noted that upcoming earnings should be solid. Goodheart at Group One said the stock selloff appeared to be part of a market-wide rotation out of technology stocks into big caps that have sent the Dow Jones Industrial Average soaring above 10900 but subdued broader indices. He added that the call-buying could be due partly to liquidation of short calls by buy-writers. "People that sold calls when the stock was trading 55 or 60 or 65 are just buying their shorts," the market-maker said. "They have had a nice profit (on the short calls) and I think they're taking their money off the table." In a buy-write, a trader buys a stock and sells a call against it. The premium from the call selling would supplement the stock's returns if the stock makes little or no gain and would partially offset losses if the stock declines. The risk is that the stock could be called away by the call buyer if the stock makes a big gain. chicago.derivatives.newsroom@reuters.com)) Copyright 1999, Reuters News Service